If a person believes that prices are going up, they might be more likely to make purchases or ask for a raise now, rather than waiting. That can increase demand and push prices up even faster, forcing central bankers to take aggressive actions on interest rates.
But if people expect inflation to eventually go back down to 2%, that cycle might not be as dramatic.
“That makes the Fed‘s job easier,” said John M. Veitch, dean of the School of Business and Management at Notre Dame de Namur University.
That is why central bankers care so much about “anchoring” inflation expectations.